With Dyster's Planned City Share of Casino Cash Going to State, Change Will Be Enormous

By Frank Parlato

September 30, 2014

It is possible that, as it did from 2012 to 2013, the casino revenue will continue to fall, in the future, causing the free spending of casino cash to come to a halt.

Few residents realize how dependent city government has become on casino cash.

As mentioned in an article in this edition, the city took in $1.4 million less in casino cash in 2013 than it did in 2012 and, based on the first quarter payment of only $4.5 million for 2014, the city may drop another $1 million or more in 2014, dipping from a high of $21.6 million in 2012, to $20.2 million in 2013 to a possible $19 million in 2014.

If few understand how much the casino revenue is dropping, it is to be assumed that even fewer understand how the city is sorely dependent on casino revenue remaining high.

For years, Mayor Paul Dyster had a virtual slush fund to give away casino to any and all.

According to records obtained from a Freedom of Information request, the total casino revenue received by the City of Niagara Falls to date is more than $175 million.

Look at some of the spending: Hope VI, a 282-unit public housing project, got $6 million. Then there was the courthouse and public safety building on Main Street. The city borrowed $45 million to build it. The city has an annual $2.8 million payment for 30 years.

Dyster gave his friends at the NACC, a not-for-profit arts and crafts studio, $100,000.

He gave $500,000 to the custom house.

Another several million went to the train station.

And $900,000 went to the NFC, which gave money to millionaire Faisal Merani to improve one of his hotels. LiRo Engineering received $28,000 to design a basketball court on 11th St. The Seminole Nation of Indians, the owners of Hard Rock, were given $507,000 to put on free concerts. Another $9,000 went for a "Boundary Waters concert," $36,000 went to Toby Rotela for blues festivals and the Rapids Theater got $250,000.

Businesses, including some that closed like Shorty's, Mary's Soul Food and Edy J's., along with Niagara Metals, Erdco, Gadawskis, assorted gas stations and others got $375,000 in grants or loans through NFC, funded by casino cash. The Red Coach Inn got $50,000.

Another $30,000 of casino money went to the Buffalo Niagara Economic Development Summit. And $840,000 went to a consultant for designs and work on the Ice Pavilion.

Some $500,000 went for a memorial for veterans in Hyde Park. Some $9,335 went to Mulligan's restaurant for tables, chairs and bar stools at the golf course;$21,000 went to the National Urban Fellow program; $50,000 to join the Buffalo-Niagara Partnership; $13,000 for bathrooms in city hall; $91,000 for a consultant for the design of roads; $23,000 went for landscaping; $9,000 for the Centennial Circle downtown; and $10,000 went for landscaping "gateways into the city." The purchase of the Lotus Spa on 3rd street, a massage and acupressure spa that turned out to be a brothel, received $65,000; $263,000 went for basketball courts. A storm event flooding study cost $21,500. The council chambers got a new sound system for $31,918. The Ezekiel project got $54,000. Community Missions got $150,000 to help them pay a tax bill. Isaiah 61 will get $500,000 so they can have a new store at the old fire hall on Highland Ave. An Underground Railroad coordinator got $80,000. The Holiday Market got $225,000. Another $75,000 was spent on streetscape for Third St. and$650,000 was given to millionaire Faisal Merani for another project.

But those days are over.

Mayor Dyster has spent it away and with his new proposal to give USA Niagara $1.5 million per year for the next five years and a commitment to give another $4 million per year for Gov. Cuomo's "Downtown Niagara Falls Development Challenge" for the next five years, the money is all spoken for.

As for the $4 million "Development Challenge," it was last October, readers may recall, that Cuomo and Dyster agreed to partner up by offering access to public dollars over the next five years as part of a competition. They said they were looking for proposals for "signature projects" to boost tourism from world-class designers, developers and operators and would give them public money- the governor taking his share out of the Buffalo Billion and Dyster using $4 million in casino cash annually.

As the Buffalo News reported in October of 2013, "The public funding will come over five years, with $4 million each year from the city's share of slot machine revenue from Seneca Niagara Casino and $4 million from the Buffalo Billion.

It is not clear whether approvals from the City Council would be necessary to access the casino funds.

But really that is of no matter, for this council majority wouldn't dare question a plan from Dyster and the governor.

"This transformative commitment of $40 million ($20 million from the casino cash) will jump-start the additional private development needed to create an exciting, family-friendly Niagara Falls experience," Dyster said in a written statement.

With these two changes in casino spending plus the dip in revenue, reality will set in starting in 2015, with the expenditures of the 2104 casino cash.

The large ladling of money to Tom Richard and Harry is over. The state will be getting the extra money.

Worse, even the necessary things done with casino cash may be a thing of the past.

Let's take a minute to explain how this could and is likely to happen.

First, right off the top, there is the courthouse debt and other city debt payments that are paid for by casino cash.

This year that's more than $5.2 million. Next year it rises to $6.1 million and goes up from there.

Then each year, percentage and/or flat rate payments are made to the Niagara Falls School District, Memorial Hospital, The Niagara Tourism and Convention Corp., the NFTA and the Underground Railroad Heritage Commission. Collectively these payments equal about 26 percent or, in a year when the city gets $20 million in casino funds, about $4.25 million.

If casino revenues continue at $20 million, debt service and payments to the above named institutions and corporations absorb more than half the money - or about $10.3 million.

Dyster just added $1.5 million for USA Niagara and will add a promised $4 million for the governor's annual incentive development contest.

Out of $20 million, now only $4.2 million is left if, and only if, the city continues to collect $20 million.

During the entirety of the Dyster administration, he has used millions each year for what are called "capital projects."

The city has been reliant on casino cash for many of these capital projects which include roads, sidewalks, trees, police overtime, guardrails, catch basins, demolitions, police vehicles, DPW vehicles, fire vehicles etc. In other words, casino cash supports a large portion of the needs of police, fire and DPW.

In 2014, casino cash outlays for capital projects for the DPW, Fire and Police departments are $5.4 million. Expenses range from a pothole killer at $100,000 to DPW equipment at $803,000.

In 2013, it was $5.7 million.

With the addition of $1.5 million to USA Niagara and $4 million for the governor's economic development contest, there will not be enough money left to do the capital improvement projects that have been typically done in past years.

Dyster will have to make cuts to these departments.

City Controller Maria Brown's five year projections show a $3.1 million shortfall in casino cash starting next year.

Assuming no further drop in casino revenue, there will be a $3 million dollar shortfall- without any of the giveaways like Blues Fests, or Isaiah 61.

However, a further drop in casino revenue is inevitable, we suspect, with the opening of more casinos in New York and elsewhere.